Research Conducted at University of Economics Bratislava Has Updated Our Knowledge about Economics (Proposal for Securitization of Systemic Risk In Slovak Agriculture): Economics

Economics Daily Report

2021 OCT 14 (NewsRx) -- By a News Reporter-Staff News Editor at Economics Daily Report -- New research on Economics is the subject of a report. According to news reporting originating from Bratislava, Slovakia, by NewsRx correspondents, research stated, “The article proposes insurance of agricultural crop represented by hectare yield in Slovakia. There is a systemic risk, for which the fund from collected premiums may not be sufficient for the insurer.”

Our news editors obtained a quote from the research from the University of Economics Bratislava, “It therefore seeks reinsurance in the reinsurance market. If it is exhausted, the reinsures transfers the unbearable part of the risk to the capital market by means of ILS instruments, namely CAT bonds. The indicator of a loss event is the value of the loss index. The diverse geographical relief of Slovakia causes different conditions for farmers to grow crops, in our article we took wheat. Different hectare yields are achieved due to different geographical conditions in the same production process. This causes a balance distortion between the amount of the same premium and the amount of the risk borne and the existence of a basis risk. Due to its elimination, we will divide growers according to cultivated land into agricultural production areas, where the achieved hectare yields are registered, and we will evaluate CAT bond for each of them. The risk is then transferred to the capital market.”

According to the news editors, the research concluded: “For a securitization process to be feasible, the tradability of a CAT bond is essential.”

This research has been peer-reviewed.

For more information on this research see: Proposal for Securitization of Systemic Risk In Slovak Agriculture. Ekonomicky casopis, 2021;69(4):359-378. Ekonomicky casopis can be contacted at: Inst Economics Research Sas & Inst Forecasting Csps Sas, Sancova 56, Bratislava, Slovakia.

The news editors report that additional information may be obtained by contacting Ludovit Pinda, University of Economics Bratislava, Fac Econ Informat, Dept Math & Actuaries Sci, Dolnozemska Cesta 1, Bratislava 85235, Slovakia. Additional authors for this research include Michal Pales, Lenka Smazakova and Branislav Misota.

The direct object identifier (DOI) for that additional information is: https://doi.org/10.31577/ekoncas.2021.04.02. This DOI is a link to an online electronic document that is either free or for purchase, and can be your direct source for a journal article and its citation.